Designation of locally-produced cement apparently approved

The designation of locally-produced cement, which will make it mandatory for it to be used by contractors on any government projects and prohibit the use of imported cement on these projects, has reportedly been approved in principle by National Treasury.

Bryan Perrie, CEO of Cement & Concrete SA (CCSA), a newly established consolidated concrete and cement industry body, said on Monday that his understanding from the Department of Trade and Industry and Competition [dtic] is that the industry’s application for designation is with National Treasury.

“According to [the dtic], it has been approved but still has to go through the chief procurement officer or something like that to be formally gazetted. In principle, designation has been approved but that is the best I have. I don’t have anything in writing,” he said.

National Treasury has not yet responded to a request from Moneyweb for comment on the status of the application.

The matter has become more important in light of the government’s planned massive infrastructure investment plan.

The government in July 2020 unveiled 50 Strategic Infrastructure Projects and 12 special projects, involving a total investment of R340 billion, as the first tranche of a massive infrastructure expenditure programme to drive the post Covid-19 economic recovery effort.

Read:
First post-pandemic-recovery infrastructure projects gazetted
‘Smoke and mirrors’ from government on infrastructure expenditure

The 2021 Budget Review released last week revealed that government has a programme to spend R791.2 billion on infrastructural investment over the next three years.

The CCSA has been established through the consolidation of The Concrete Institute (TCI), the Concrete Society of Southern Africa and the Association of Cementitious Material Producers (ACMP), and was launched on Monday.

Perrie, who was previously CEO of TCI, said all that designation means is that locally-produced cement must be used for any government-funded project, whether it is a local, municipal, provincial, national or state-owned enterprise project.

He said the designation will have to be enforced to ensure that contractors do not use imported cement, which is where the problem arises.

Perrie added that much of the imported cement coming into South Africa meets the regulatory standard but is partially subsidised in the countries where it is produced.

“They [imported cement producers] also don’t have to comply with the empowerment requirements, the labour requirements, and don’t have the Mining Charter,” he said.

Perrie said imported cement producers can make the right quality of cement and the designation “is really to protect the local industry from unfair competition effectively”.

Read: Cement imports accelerate

He said the CCSA will in future take the lead on all matters related to cement and concrete in South Africa, including tariff protection against imported cement and the designation of cement.

The International Trade Administration Commission (Itac) in December 2020 accepted an application from the cement industry for a sunset review of the import tariffs imposed on cement from Pakistan five years ago.

Perrie said all the information has been provided to Itac for this review “so the ball is in their court”.

The cement industry is also still waiting for Itac to finalise an application first submitted to the commission in August 2019 by TCI, on behalf of the industry, for “safeguard action” against cheap cement imports, particularly from countries such as China and Vietnam.

‘Authoritative engagement’

Commenting on the rationale for the establishment of CCSA, Perrie said there was always a huge amount of confusion about what the three organisations were doing.

He said ACMP, for instance, “sits in the background and very few people know about them”.

“They are very involved with government in legislation on emissions and carbon tax and that sort of stuff,” he said.

Perrie added that companies were putting money into all three organisations but felt it would be far better to put their resources into a single body that represents and can be the voice of the broader cement and concrete industry and also hopefully eliminate any overlaps and gaps in what they were doing.

He said CCSA has been mandated to promote and support the industry to drive growth and deliver shared value through a unified platform for cement and concrete.

Read: Operating environment potentially improves for SA cement industry

The body will create long-term shared value and industry growth in South Africa by driving collaboration, skills development, innovation, and the highest standards in sustainable cement and concrete materials and products, he added.

“At a time where many conflicting and ambiguous messages are shared readily on various platforms, and with the proliferation of substandard products and services, the need for authoritative engagement with all stakeholders is critical,” he said.